BILL ANALYSIS
SB 974
Page 1
SENATE THIRD READING
SB 974 (Lowenthal)
As Amended September 5, 2007
Majority vote
SENATE VOTE :22-12
NATURAL RESOURCES 5-3 TRANSPORTATION 8-6
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|Ayes:|Hancock, Brownley, Laird, |Ayes:|Nava, Carter, DeSaulnier, |
| |Saldana, Wolk | |Karnette, Portantino, |
| | | |Ruskin, Solorio, Soto |
|-----+--------------------------+-----+--------------------------|
|Nays:|Fuller, Aghazarian, Keene |Nays:|Duvall, Galgiani, Garrick |
| | | |Horton, Houston, Huff |
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APPROPRIATIONS 11-5
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|Ayes:|Leno, Caballero, | | |
| |DeSaulnier, Huffman, | | |
| |Karnette, Krekorian, | | |
| |Lieu, Ma, Nava, Solorio, | | |
| |De Leon | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Walters, Emmerson, La | | |
| |Malfa, Nakanishi, Sharon | | |
| |Runner | | |
| | | | |
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SUMMARY : Imposes a $30 fee on each shipping container processed
at the Ports of Los Angeles, Long Beach, and Oakland to fund
congestion management and air quality improvement projects
related to the ports. Specifically, this bill :
1) Requires the Ports of Long Beach, Los Angeles, and Oakland,
by January 1, 2008, to develop a process to notify and
collect user fees from container cargo owners. The ports
must notify the cargo owners by June 1, 2008, that a $30 per
twenty-foot equivalent unit (TEU) user fee will be assessed.
Certain information must be provided, such as the process and
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frequency of payment, and that the user fee is being assessed
to improve goods movement infrastructure serving the port,
and to reduce pollution from all forms of port-related
equipment.
2) The three ports must assess the $30 TEU user fee beginning
January 1, 2009, and collect the fee twice a year, with 50%
of the fees directed to congestion relief (to fund projects
that improve the flow and efficiency of container cargo) and
50% to air pollution mitigation (to mitigate air pollution
caused by cargo movement).
3) Funds are locally-administered and projects are
locally-determined. For the Ports of Long Beach and Los
Angeles, congestion management is governed by the Southern
California Goods Movement Authority, established by this
bill, and air pollution is governed by the South Coast Air
Quality Management District. For the Port of Oakland,
congestion management is governed by the Metropolitan
Transportation Commission and air pollution is governed by
the Bay Area Air Quality Management District. For all ports,
the local lists of congestion management projects must be
approved by the CTC and air pollution projects must be
approved by the ARB.
4) Authorizes the ports to issue revenue bonds to finance port
congestion relief and mitigation projects.
EXISTING LAW :
1) Under the Harbors and Ports Mitigation Law, requires a public
agency to approve certain mitigation for port projects
involving filling of subtidal habitats within ocean or inland
ports (Harbors and Navigation Code 1720 et seq.).
2) Establishes the California Transportation Commission (CTC)
and sets various duties and procedures for the CTC
(Government Code 14500 et seq.).
3) Authorizes the State Air Resources Board (ARB) to coordinate
efforts to attain and maintain ambient air quality standards
(Health and Safety Code 39003) and specifies its powers
(Health and Safety Code 39500 et seq.).
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FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Substantial revenue, in the range of $100 million in 2008-09
and $340 million annually thereafter, generated by the maximum
$30 per TEU fee on containerized cargo imposed by the Ports of
Los Angeles and Long Beach.
2)Substantial revenue, in the range of $17 million in 2008-09
and $54 million annually thereafter, generated by the maximum
$30 per TEU fee on containerized cargo imposed by the Port of
Oakland.
3)Substantial revenue bond debt, up to $5 billion outstanding
principal at any one time, resulting from the issuance and
sale of revenue bonds secured by revenue generated by the
containerized cargo fee.
4)Minor one-time costs, in the range of $300,000, primarily in
2007-08, for the CTC and the ARB to develop the list of
projects eligible to be funded from containerized cargo fee
revenue. These costs are covered by fee revenue.
COMMENTS : According to the author, the Ports of Los Angeles,
Long Beach, and Oakland are the nation's first, second, and
fourth largest ports, respectively, and are projected to
experience tremendous growth. The author cites certain
information as the basis for this bill, including the following:
1)According to a 2006 report by the ARB, pollution from our
state's ports causes 2,400 premature deaths annually.
2)ARB recently estimated that over the next 15 years, polluting
activity from operations at California's ports will have an
aggregate health impact equivalent to approximately $200
billion in present value dollars.
3)A disproportionate number of communities impacted by port
pollution are low-income communities of color, the state
currently shoulders much of these port-caused health costs.
4)By 2020, ports and freight transport operations will be the
largest source of particulate matter (PM) and nitrogen oxide
(NOx) emissions in the state, producing more diesel PM than
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all passenger vehicles, off-road equipment and stationary
sources combined.
5)According to the Los Angeles Economic Development Corp.
(LAEDC), Southern California must spend at least $10.5 billion
to improve railroads, rail yards and highways to keep up with
surging international trade or risk losing more than 500,000
new jobs and more than $1 billion of taxes a year.
6)Inefficiencies in the freight transport system are costly to
the state. Improving our rail system will reduce the number
of diesel trucks on our freeways and alleviate congestion.
For example, "on-dock rail" is a less polluting and more
efficient alternative to trucking goods on our freeways.
Congestion costs Southern California more than $10 billion in
2003.
7)Southern California risks losing $12.1 billion in federal
highway funds if federal Clean Air Act standards aren't met.
So far, the basin has failed to meet national standards for
ozone or for particulate emissions.
8)The growth of the Ports of Los Angeles and Long Beach is
staggering. The 2 ports move approximately 40% of the
nation's cargo. The LA/LB port complex is the largest port
complex in the United States and under current operating
conditions will see cargo triple (from 15 million TEUs, to 47
million TEUs) by 2020. The ports are the single largest
source of air pollution in the South Coast Basin.
Opponents generally assert that the fee in SB 974 violates the
commerce clause of the U.S. Constitution and increases costs of
importing and exporting through the ports. Supporters generally
cite concerns about negative impacts of port goods movement
activities and related affects on air quality and certain
infrastructure.
In a 2005 opinion based on a prior version of this bill,
Legislative Counsel concluded that "it is our opinion that a
court faced with the question would find that the charge
proposed?is a valid regulatory fee imposed under the police
power of the state, as long as the amount of the charge assessed
does not exceed the reasonable cost of providing the services
described, and that amount bears a reasonable relationship to
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the burdens created by the marine terminal operators."
Regarding the commerce clause issue, Legislative Counsel
concluded that "there is not federal legislation relating to the
subjects addressed under [Section 1745]. Thus, it is our view
that, generally, the state may legislate in this area" and that
"we conclude that the charge proposed under Section 1745 would
survive scrutiny under the commerce clause of the United States
Constitution as a legitimate regulatory fee imposed under the
police power of the state."
Related legislation . SB 760 (Lowenthal) of 2006 established a
similar container fee program for the Ports of Long Beach and
Los Angeles, but not Oakland. The provisions of that bill were
subsequently amended into SB 927 (Lowenthal) of 2006. In
vetoing SB 927, Governor Schwarzenegger indicated that "if done
in a more coordinated fashion with the public and private
sector, funding for additional congestion relief and mitigation
could be increased geometrically." The Governor also cited his
support of the transportation bond (Proposition 1B) and noted
that "my goods movement task force is developing a comprehensive
report that will provide more thorough and strategic direction
and insight on what the best options are to address goods
movement and port related challenges."
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092
FN: 0003000